Affiliate marketing for small businesses

What is affiliate marketing?

Affiliate marketing is an online marketing programme whereby website owners are rewarded for promoting a particular product, service or site.

It essentially works on the same principal as traditional referral schemes. It is mostly relevant to businesses with an ecommerce or transactional element to their company website, such as using it to collect leads via an enquiry form.

What are the pros and cons?

By using affiliates, you can reach new markets and customers that may not otherwise see you

Depending on who you partner up with, your reputation could benefit from their referral

Can significantly boost traffic to websites, but firms only have to pay on results (when a sale or transaction is made)

Websites with affiliate partners can attribute up to 30% of online sales to these schemes.

On the downside, managing an affiliate programme can be time-consuming. You will need to manage each affiliate account to see if it is working and update it. This is why third parties can be useful, though this is more expensive.

How do I set up an affiliate programme?

The cheapest means of setting up a scheme is to establish and run it yourself, simply by approaching suitable firms. This gives you control over who you work with, but can prove time-consuming and you will have to be able to track sales and work out commissions.

Start by approaching potential partners direct or use networks to get access to third parties if you have a budget and want to take the hassle out of setting up a scheme.

How much does it cost?

Because you only pay when a sale is made, you don't pay for any other traffic directed to your site, making it very cost effective for small businesses.

However, there are likely to be some set-up costs in excess of £1,000 if you go through a third party affiliate network or agency, though these differ. Typically, most will also charge around 30% commission on each sale.

Becoming an affiliate If your business has a content-rich, regularly updated website with lots of traffic – for example, a successful blog – you may be suitable to become an affiliate for other companies and receive money for every visit you refer which results in a sale, forming another income stream.

Affiliate programmes are normally free to join and some large online retailers, like Amazon, run in-house affiliate programmes. The products you choose to promote should be directly relevant to your content though, or visitors to your website will quickly be put off.

Is it for you?

Affiliate marketing can be a powerful tool to boost sales and revenue, but it should only be one part of your marketing plan and wider online marketing efforts. You should know exactly who you are trying to target and which websites they are likely to visit before setting up an affiliate scheme.